Summary
· Revenue of £574.0m, a decrease at constant exchange rates of 7%
· Revenue growth in the Americas and EMEA regions; weakness in the APAC region (19% decrease at constant exchange rates*)
· Metrology revenue decreased by 7% to £532.9m, largely as a result of a slowdown in demand for encoder and machine tool products in the APAC region
· Metrology revenue benefited from strong growth in our additive manufacturing line and good growth in our measurement and automation line (Equator gauging systems) and fixturing line
· Healthcare revenue increased by 15% with strong growth in our spectroscopy and medical dental product lines giving rise to Adjusted operating profits of £3.1m (2018: £0.3m)
· Adjusted* profit before tax of £103.9m (2018: £145.1m), a decrease of 28%
· Statutory profit decreased by 29% to £109.9m (2018: £155.2m)
· Strong balance sheet, with cash of £106.8m, compared with £103.8m last year
· Recommended final dividend of 46p per share; total dividend for the year of 60p (2018: 60p)
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2019 |
2018 |
Change |
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Revenue (£m) |
574.0 |
611.5 |
-6% |
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Adjusted* profit before tax (£m) |
103.9 |
145.1 |
-28% |
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Adjusted* earnings per share (pence) |
119.9 |
170.5 |
-30% |
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Dividend per share (pence) |
60.0 |
60.0 |
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STATUTORY |
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Profit before tax (£m) |
109.9 |
155.2 |
-29% |
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Earnings per share (pence) |
126.7 |
181.8 |
-30% |
*Note 25, 'Alternative performance measures', defines how adjusted profit before tax, adjusted earnings per share, adjusted operating profit and revenue at constant exchange rates are calculated.
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report our 2019 results. We achieved a turnover for the year of £574.0m (2018: £611.5m) with a decrease in revenue of 7% at constant exchange rates*, against a backdrop of challenging economic conditions. Adjusted* profit before tax amounted to £103.9m (2018: £145.1m), a decrease of 28%.
Following the appointment of Will Lee as Chief Executive last year, I have been delighted to see his progress and strong leadership during the year. He is driving change in key areas of the business, including a focus on the skills development of our people, to continue to improve productivity.
Innovation drives our business, from the generation of new technologies to new manufacturing processes. In my role as Executive Chairman, I have enjoyed the opportunity to focus on Group innovation and product strategy, supporting our talented engineering teams. This has included our industrial metrology and additive manufacturing technologies, where there are exciting opportunities for future growth.
During the year, we continued to invest in developing future technologies, with total engineering costs of £97.9m (before net capitalised development costs and the R&D (research and development) tax credit), amounting to 17% of total revenue.
Board changes
On 30 June 2019, Geoff McFarland, Group Engineering Director, resigned as a Director of the Board for family reasons. On behalf of the Board, I would like to thank Geoff for the invaluable contribution he has already made to the developments that have helped Renishaw grow into the global technology leader that it is today. I look forward to continuing to work with him in his new role as Director of Group Technology, reporting to Will.
As reported last year, Kath Durrant stepped down from the Board on 31 July 2018. Catherine Glickman joined us as an Independent Non-executive Director on 1 August 2018, becoming Chair of the Remuneration Committee and a member of the Audit and Nomination Committees. Catherine previously held the role of Group HR Director at Genus plc and Tesco PLC and is making a valuable contribution as we strengthen our HR processes and implement a new internal communications and employee engagement strategy.
People, culture and values
We thrive through our collaborative team of 5,000 people. They bring fresh thinking, deep experience and an obsession with quality to every aspect of their work. On behalf of the Board, I would like to thank them all for their professionalism and dedication during the year.
We have created a culture that aims to allow our employees to maximise their potential. We work hard to encourage open communication and innovative thinking and believe everyone in our business should feel valued and be able to grow.
Innovation is at the heart of everything that we do and is one of our core values. We believe our people are fundamental to our disruptive thinking and manufacturing excellence which helps our customers to increase their own innovation, improve quality, expand output and enhance efficiency.
Integrity is another of our core values and is key to the relationships that we have with our people, customers, suppliers, communities and other stakeholders. We strive at all times to be open, honest and consistent.
We are also focused on diversity at all levels. During the year we published our second Gender Pay Gap report. While progress has been made, we and our industry still have much work to do in this area. Our educational outreach programmes engage with children from primary school age onwards to encourage more young people from diverse gender, ethnic and economic backgrounds into the sector.
Corporate governance
The Board is committed to the highest standards of corporate governance to protect our business and its long- term success. The Board has already started to consider the new 2018 UK Corporate Governance Code and steps have been taken to start implementing its requirements.
Investor communications
Our sixth annual investor day on 14 May 2019 was attended by a record 150 people, with an equal mix of private and institutional investors. The day included presentations on Group strategy, industry sectors and key sales regions, as well as demonstrations, opportunities to meet the Board and senior management, and a question and answer (Q&A) session with Board members. Following the event, we conducted a survey with all the attendees to gather further feedback.
The event is one of four key touchpoints across the year where the investment community can learn more about Renishaw's business and strategy, with the Annual General Meeting (AGM) in October, plus live half-year and full-year webcasts.
UK defined benefit pension scheme
Following further engagement with The Pensions Regulator, the Company and trustees have agreed the terms of a new deficit funding plan for the Company's UK defined benefit pension scheme. The Company has agreed to pay £8.7m per annum into the scheme for five years with effect from 1 October 2018. Under the terms of the previous agreement the Company paid approximately £4m per year.
Dividend
A final dividend of 46.0p net per share will be paid on 31 October 2019, to shareholders on the register at 27 September 2019, giving a total dividend of 60.0p for the year (2018: 60.0p).